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Mexico Agribusiness Report Q2 2009Published by: Business Monitor International Published: Apr. 23, 2009 - 49 Pages Table of Contents
AbstractIn BMI's Mexico Agribusiness Report for Q2 2009, we introduce the new Business Environment section.This section gives an overview of agriculture in Mexico and its significance to the overall economy andlabour market. We also cover support given to agriculture by the government. While most of the economic news coming out of Mexico is fairly grim, the final quarter of 2008 broughtgood news for the country's farmers, as the value of the peso plummeted against the US dollar. FromSeptember 2008 to March 2009, the peso sank from just over MXN10/US$ to just over MXN15/US$.This will significantly improve the competitiveness of Mexican agricultural goods against imports fromthe North. The lifting of tariffs on agricultural goods from the US and Canada under NAFTA at thebeginning of last year had led to fears among farmers that their produce would be undercut by imports. The fear of a collapse in production of key grain staples has been present since the liberalization ofMexican agriculture and the establishment of NAFTA in 1994. Production, however, has held up well,with corn output rising by more than 20% from 1994 to 2007. Consumption of corn has risen even faster,though a large part of this growth has come from rising demand for yellow corn for animal feed in thelivestock sector, rather than white corn which is preferred for human consumption. Mexican agriculture is still very fragmented, a legacy of decades of government expropriation of land andredistribution to collectives. Despite a change in the law in 1992 which gave formal ownership of land tomembers of collectives, change has been slow. In 2004, 85% of corn farms were less than five hectares inarea, and almost 30% were less than one hectare. The pace of reform has been particularly slow in the poor South of the country, where small-scalesubsistence agriculture often provides the majority of employment. Despite agriculture contributing only3.6% to Mexico's GDP in 2007, the sector still employs more than 15% of the workforce. While thedevelopment of large farms throughout the country - so far most large farms are concentrated in the North- is likely to improve the competitiveness of Mexican agriculture, there is considerable opposition to theeroding of the traditional way of life, particularly in the southern state of Chiapas, home of the ZapatistaArmy of National Liberation. In pursuing policies to develop the country's agricultural sector, the government will have to balance thesocial impact of moving toward more mechanized, less labour-intensive production against the desire tofoster an efficient industry that can compete on equal terms with its Northern neighbours. Get Full Details About This Report >> |
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